ability, resources, weakness of the competition, or the opposing sources.
failures, defeats, loses, and inability to match up with the
dynamic situation of
of what can be done and where effectiveness is possible.
changes in business
environment, PEST forces – political, economic, social,
What is SWOT Analysis?
Strengths, Weaknesses, Opportunities and Threats
(SWOT) analysis is a
strategy development tool that matches internal organizational strengths and
weaknesses with external opportunities and threats.
A Balanced Perspective
SWOT analysis helps you
balance idealism and
pragmatism, and obtain a balanced
perspective of your internal strengths and weaknesses and external
opportunities and threats to develop an effective
Why SWOT Analysis?
SWOT Analysis is the Key
Component of Strategic Development. It can prompt actions and responses.
Successful businesses build on their
strengths, correct their weaknesses and
protect against internal vulnerabilities
and external threats. They also keep an eye on
their overall business environment and spot and
exploit new opportunities
faster than competitors. SWOT analysis is a tool that helps many businesses in this process.
SWOT analysis is based on the assumption that if managers can
carefully review such strengths, weaknesses, opportunities, and threats, a
useful strategy for ensuring organizational success will become evident to
Two factors contribute to your strengths:
evaluated on 3 counts:
ability to adapt to an ever changing environment.
Growth: your ability to maintain a continuing growth.
Markets: your ability to penetrate or create new markets.
The strength of resources
has three dimensions:
Availability: your ability to obtain the resources needed.
Quality: the quality and up-to-dateness of the resources
Allocation: your ability to distribute resources both
effectively and efficiently.
Your weaknesses are determined through failures, defeats,
losses and inability to match up with the dynamic situation and rapid
change. The weaknesses may be rooted in lack of
managerial skills, insufficient
inadequate systems or
processes, slow deliveries, or shortage of resources. There are
three possible outcomes to the analysis of your weaknesses.1
Correction of an identified defect.
Protection through cover-up and prevention strategies to
reduce the exposure of your weaknesses.
Aggression to divert the attention from your weaknesses.
Opportunities are abundant. You must develop a formula which
will help you define what comes within the ambit of an opportunity to
focus on those areas and
pursue those opportunities where effectiveness is possible. The formula
must define product/service, target market, capabilities required and
resources to be employed, returns expected and the level of risk allowed.
Weaknesses of your competitions are also opportunities for
you. You can exploit them in two following ways:
Marketing warfare: attacking
the weak leader's position and focusing all your
efforts at that point, or making a
surprise move into an
Collaboration: you can use your complementary strengths to
establish a strategic
alliance with your competitor.
External threats arise from political, economic, social,
forces. Technological developments may make your offerings obsolete. Market
changes may result from the changes in the customer needs, competitors'
moves, or demographic shifts. The political situation determines government
policy and taxation structure.